South Plains Financial, Inc. · NASDAQ:SPFI
South Plains Financial — Investor Presentation (May 2021)
36 slides from South Plains Financial's investor presentation, May 18, 2021
Slide 1: South Plains Financial Investor Presentation May 2021
South Plains Financial Investor Presentation May 2021 1
Slide 2: Safe Harbor Statement and Other Disclosures
Safe Harbor Statement and Other Disclosures FORWARD-LOOKING STATEMENTSThis presentation contains, and future oral and written statements of South Plains Financial, Inc. (“South Plains” or the “Company”) and City Bank (“City Bank” or the “Bank”) may contain, statements about future events that consti
Slide 3: A Leading West Texas Franchise
A Leading West Texas Franchise 3 Financial Snapshot (As of March 31, 2021) Our Company Bank holding company headquartered in Lubbock, Texas with $3.7 billion in total assetsOne of the largest independent banks headquartered in West TexasExecuted a successful IPO in May 2019; now one of two publicly-
Slide 4: Our History and Growth Profile
Our History and Growth Profile 4 Our History Loans and Deposits ($M) First State Bank of Morton, a community bank that held approximately $1 million of total assets in 1941Parent company to First State Bank of Morton acquired South Plains National Bank of Levelland, Texas in 1991 and changed its nam
Slide 5: Investment Highlights
Investment Highlights 5 Improving Profitability Organic Growth Strong Credit Culture Enterprise Risk Management Experienced Management Team Emphasize Community Banking Capital Allocation to Drive Value 1 2 3 4 5 6 7
Slide 6: Experienced Management Team
Experienced Management Team 6 Curtis C. GriffithChairman & Chief Executive Officer Elected to the board of directors of First State Bank of Morton, Texas, in 1972 and employed by it in 1979Elected Chairman of the First State Bank of Morton board in 1984Chairman of the Board of City Bank and the Comp
Slide 7: Significant Insider Share Ownership
Significant Insider Share Ownership Stakeholders / Insiders currently own approximately 39.7% of the Company 7 Shares1 Name Title Position % Outstanding Market Value ($000’s) South Plains Financial ESOP ESOP 2,501,523 13.87% $57,135 Curtis C. Griffith Chairman & CEO 2,485,991 13.78% 56,780 Henry Taw
Slide 8: Emphasis on Community Banking
Emphasis on Community Banking 8 2 Our strategy - deliver best-in-class customer service and achieve our goal of becoming the preferred community bank in our market areasTo achieve our goal - we build long-lasting relationships with our customers by delivering high quality products and services Our f
Slide 9: Our Markets of Operation
Market Branches1 Deposits($ millions)1 Market Highlights 10 $2,055 Population in excess of 310,000 with major industries in agribusiness, education, and trade among othersHome of Texas Tech University – enrollment of 40,000 students 6 $273 Responsible for the production of over four million barrels
Slide 10: Our Markets of Operation (Cont'd): Lubbock MSA
Our Markets of Operation (Cont’d) 10 Deposit Market Share: Lubbock MSA Lubbock, Texas – Our Home Market Major industries include agriculture – primarily cotton, corn, and grain sorghum – as well as education, trade and transportation, health services and governmentHome to Texas Tech University – enr
Slide 11: Enterprise Risk Management
Enterprise Risk Management 11 3 We implemented a rigorous enterprise risk management (“ERM”) system in the aftermath of the financial crisis, and view this development as a defining event for our institution This system delivers a systematic approach to risk measurement and enhances the effectivenes
Slide 12: Our Credit Culture
Our Credit Culture 12 We have a service-driven, relationship-based, business-focused credit culture, rather than a price-driven, transaction-based cultureSubstantially all of our loans are made to borrowers located, or operating, in our primary market areas with whom we have ongoing relationships ac
Slide 13: Loan Approval Process
Loan Approval Process 13 Striking a Balance Between: In Our Decision Making and Responsiveness to Customers Prudence Disciplined Underwriting Flexibility Loan relationships in excess of an individual officers lending authority up to $3 million may be approved with joint authorities of the market pre
Slide 14: Credit Quality
Credit Quality 14 1Q’21 Highlights Credit Quality Ratios Minimal provision for loan loss of $89 thousand in 1Q’21 as the result of modest improvements in the economy and a decline in loans actively under a modificationTotal classified loans decreased $3 million in 1Q’21 compared to 4Q’20Nonperformin
Slide 15: Organic Growth Strategy
We are actively recruiting additional lenders and employees from other institutions. We have had success in this area which we believe is attributable to our employee ownership, long-standing market presence and desirable culture in which our employees can thrive We also cross-sell our various banki
Slide 16: Organic Growth Markets
Organic Growth Markets 16 El Paso Adjacent to Juarez, Mexico, which has a growing industrial center and an estimated population of 1.5 million people, and has contributed to significant growth in the El Paso MSAHome to Fort Bliss, which houses the 1st Armored Division, the 32nd Army Air and Missile
Slide 17: Capital Allocation to Drive Value
Capital Allocation to Drive Value 17 Growth Through Accretive M&A We plan to take advantage of acquisition opportunities, and use a combination of public stock and cash to become the acquirer of choice in our core markets of West Texas and New MexicoCatalysts for acquisition activity include managem
Slide 18: Improving Profitability
Improving Profitability 18 We have invested heavily into our infrastructure including:Our Enterprise Risk Management system State-of-the-art operations center which houses the Bank’s back-office processing for deposit operations, loan operations, mortgage operations, and corporate trainingDigital an
Slide 19: Investment Highlights
Investment Highlights 19 Improving Profitability Organic Growth Strong Credit Culture Enterprise Risk Management Experienced Management Team Emphasize Community Banking Capital Allocation to Drive Value 1 2 3 4 5 6 7
Slide 20: Financial Update
Financial Update &%% South Plains ‘“aiy’ Financia
Slide 21: First Quarter 2021 Highlights
First Quarter 2021 Highlights 21 Note: Tangible book value per share and pre-tax, pre-provision income are non-GAAP measures. See appendix for the reconciliation to GAAP Source: Company documents Net Income of $15.2 million, compared to $15.9 million in 4Q’20 and $7.1 million in 1Q’20Diluted earning
Slide 22: Loan Portfolio
Loan Portfolio 22 Total loans increased $21.1 million in 1Q’21, compared to 4Q’20Increase in total loans during the quarter was due primarily to:$46.5 million in organic net growth; including $3.5 million in PPP loan net growthPartially offset by $25.4 million in pay downs on seasonal agricultural p
Slide 23: Loan Portfolio Composition
Loan Portfolio 23 Portfolio Composition Loan Portfolio ($ in millions) 3/31/21 Commercial C&D $ 100.4 Residential C&D 172.2 CRE Owner/Occ. 220.7 Other CRE Non Owner/Occ. 438.7 Multi-Family 70.5 C&I 268.6 Agriculture 147.9 1-4 Family 362.6 Auto 220.0 Other Consumer 67.6 PPP 173.5 Total $ 2,242.7 Sour
Slide 24: Select Loan Industry Concentration Detail
DirectEnergy Select Loan Industry Concentration Detail 24 As of March 31, 2021 Hospitality Total operating hospitality loans of $123 million*$17 million in hotels under construction, with unfunded commitments of $7 million84% of balances are to limited service hotels43% of operating hospitality clas
Slide 25: Noninterest Income
Noninterest Income 25 Noninterest Income$ in Millions 1Q’21 Highlights Noninterest income of $26.5 million in 1Q’21, compared to $18.9 million in 1Q’20Revenue from mortgage banking activities of $18.8 million in 1Q’21, compared to $8.8 million in 1Q’20Fee income primarily driven by mortgage operatio
Slide 26: Mortgage Banking Overview
Mortgage Banking Overview 26 Mortgage Banking Activity$ in Millions 1Q’21 Highlights 101% increase in mortgage loan originations for 1Q’21 to $435 million compared to $216 million for 1Q’20Mortgage servicing rights asset valuation adjustment – positive $1.3 million in 1Q’21, compared to negative $75
Slide 27: Diversified Revenue Stream
Diversified Revenue Stream Three Months Ended March 31, 2021 27 Total Revenues$56.0 million Noninterest Income$26.5 million Source: Company documents
Slide 28: Net Interest Income and Margin
Net Interest Income and Margin 28 Net Interest Income & Margin$ in Millions 1Q’21 Highlights Net interest income of $29.5 million in 1Q’21, compared to $30.2 million in 1Q’20The decline as compared to 1Q’20 was a result of:Decrease of 69 bps in loan ratesInterest expense for $50 million of subordina
Slide 29: Deposit Portfolio
Deposit Portfolio 29 Total Deposits$ in Millions 1Q’21 Highlights Total Deposits of $3.16 billion at 1Q’21, an increase of $181.3 million from 4Q’20Increase in total deposits primarily a result of organic growth as well as existing customers depositing funds received from PPP loan advances, stimulus
Slide 30: Investment Securities
Investment Securities 30 1Q’21 Highlights Investment Securities totaled $777.2 million at 1Q’21, a decrease of $25.9 million from 4Q’20; primarily from a decrease in the fair value of securities of $18.5 million due to market conditions All municipal bonds are in TexasAll MBS, CMO, and Asset Backed
Slide 31: Noninterest Expense and Efficiency
Noninterest Expense and Efficiency 31 Noninterest Expense$ in Millions 1Q’21 Highlights Noninterest expense for 1Q’21 increased from 1Q’20 primarily due to:additional $3.0 million in commissions paid on the higher volume of mortgage loan originationsa rise of $1.0 million in salary and other personn
Slide 32: Balance Sheet Highlights
Balance Sheet Highlights$ in Millions Balance Sheet Growth and Development 32 Tangible Book Value Per Share Note: Tangible book value per share is a non-GAAP measure. See appendix for the reconciliation to GAAP Source: Company documents
Slide 33: Strong Capital Base
Strong Capital Base 33 Tangible Common Equity to Tangible Assets Ratio Common Equity Tier 1 Ratio Tier 1 Capital to Average Assets Ratio Total Capital to Risk-Weighted Assets Ratio Source: Company documents Note: Tangible common equity to tangible assets is a non-GAAP measure. See appendix for the r
Slide 34: Appendix
Appendix South Plains Fin al, In
Slide 35: Non-GAAP Financial Measures
Non-GAAP Financial Measures 35 As of and for the quarter ended March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020 Efficiency Ratio Noninterest expense $ 37,057 $ 36,504 $ 35,993 $ 35,207 $ 34,011 Net interest income $ 29,544 $ 30,365 $ 31,273 $ 30,448 $ 30,199 Tax equivalent
Slide 36: Non-GAAP Financial Measures
Non-GAAP Financial Measures 36 As of and for the quarter ended March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020 Tangible common equity Total common stockholders' equity $ 374,671 $ 370,048 $ 352,568 $ 336,534 $ 326,890 Less: goodwill and other intangibles (26,648) (27,070)
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